Your Student Loan Forgiveness FAQs
- Berley B, MS
- Sep 26, 2022
- 3 min read
Hey loves,
By now, I’m sure you’ve heard about President Joe’s plan about student loan forgiveness. (I still don’t understand why he can’t just cancel all student loan debts, and let folks start living their best deserving lives). But we’re here and I’ll answer some of the most important questions around President Joe’s plan.
What are the income requirements?
You are eligible if you make $125,000 or less per year (Adjusted income) if you’re single, and $250,000 if you’re married. That is based off your 2020 or 2021 tax returns.
How much will be forgiven?
If you were eligible and received Pell Grant (money you did not have to pay back) while in college, you will have up to $20,000 forgiven. However, if you did not receive any Pell Grant, but make less than $125,000/single or $250,000/married per year, you will have up to $10,000 forgiven.
What do you mean by UP TO $10,000/$20,000?
Let’s say you currently owe $17,000, you make less than $125,000/year, and received Pell Grant while in college, you will have your entire debt cancelled, but will not receive a refund of $3,000. But let’s say you currently owe $50,000, make less than $125,000, and received Pell Grant while in college, then you will have $20,000 cancelled, and will still owe $30,000.
What’s the application process you asked?
Well, if the Department of Education already has your income information, then you’ll automatically have your loan cancelled. However, if you do not, you’ll be able to complete a “simple” application once made available. (There is not an exact date, but it will be sometime in October). Once made available, you should apply by November 15 in order to receive relief before the payment pause expires on December 31, 2022. HOWEVER, you have until December 31, 2023 to apply for the loan forgiveness.
You should sign up for their emails. The link is below:
Are Parent Plus Loans eligible?
Yes!!! You know those predatory loans they make you take when you barely knew what y=mx +b was and made sure your parents went down with you? Yes, those are included. Don’t forget to thank your parents for even agreeing to that too!
How old should my loans must be to be eligible?
ANY federally held loans obtained PRIOR to June 30, 2022.
Will you be responsible to pay taxes on the forgiven loan amounts?
Nope, the forgiven amount will not be treated as taxable income for federal tax purposes. However, you may have to pay state taxes. Some states have confirmed that they will impose state taxes whereas, others are still undecided.
But B, I’ve been making payments during the pause since it was interest free, so what now?
Well, you are entitled to a refund if you’ve made any payments from March 13, 2020. You can contact your Loan Service Provider to request a refund. However, you will receive an automatic refund if you successfully apply and receive debt relief and your payments brought your balance below the maximum debt, you’re eligible for.
Once you request a refund from your provider, they will take between 3-6 weeks to process it.
When should you expect the student loan forgiveness?
Once you apply, you should receive relief between 4-6 weeks. So, if you apply as soon as the application becomes available, then you should expect the loan to be forgiven by mid-November.
Does the forgiveness apply to private loans?
No, it does not. It is only applied to federally held loans. If you’re unsure what type of loans you have, please contact your student loan service provider, and ask.
If you have more than $10,000 to $20,000, please revise your budget and prepare to start making payments starting January 2023. This was the final extension on federally held student loans, which is set to end on December 31, 2022.
If you are a “Public Servant”- work for a government agency or a teacher, pay attention to your email in the upcoming weeks or less for our next blog. It will cover the different type of Student Loan Forgiveness already available to you.
If you have other questions about the Student Loan Forgiveness, send us an email, and we'll either answer directly to you or edit this blog.
Also, check the link below for information:
If you have specific questions about your loans, please reach out to your Student Loan Service Provider.
Ok loves, this is it for now.
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